BJAuto: Earnings continued to impress

Results Update

For QE30/4/2015, BJAuto's net profit rose 19% q-o-q or 15% y-o-y to RM55 million while revenue rose 9% q-o-q or 7% y-o-y to RM424 million. the sequentially higher revenue was attributed to higher sales volume of Mazda vehicles in Malaysia with the new Mazda2 spearheading the growth. The Group's pre-tax profit for the current quarter increased by RM11.0 million or 16.6% largely due to higher revenue and better profit contribution from associated companies. 


Table: BJAuto's last 8 quarters' financial performance

From the diagram below, we can see that BJAuto's profits are in a steady uptrend. Despite the sharp swing in top-line, BJAuto's bottom-line keeps trending higher because of its rising profit margin. 


Chart 1: BJAuto's last 12 quarters' financial performance 

Valuation

BJAuto (closed at RM3.75 at the end of the morning session) has a PER of 14 times (based on last 4 quarters' EPS of 26.6 sen). With earnings growth of 62%, BJAuto's PEG ratio is at a low of 0.2 time. Thus, its valuation is deemed acceptable.

Technical Outlook

Just 2 days ago, I made a TAKE PROFIT call on BJAuto (here) as the share price has broken its long-term uptrend line. The rating call remains as the stock is pennant formation , abcd. If it can overcome this formation, BJAuto may chart a new uptrend line. t is more likely to trade sideways, guided by either one of the two horizontal lines, RM3.50 or RM3.10.


Chart 2: BJAuto's weekly chart as at Jun 12, 2015_11.30am (Source: Share Investors)

Conclusion

Based on good financial performance and attractive valuation for a growth stock, BJAuto is a good stock for long-term investment. However, its negative technical outlook means that the stock is likely to underperform in the near term. Thus, it is advisable to TAKE PROFIT on the stock.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, BJAuto.